[Headline announcement Nuggets]

Jiangnan Buyi (03306): Net profit increased sharply in the second half of last year, paid a special interim dividend

According to the Zhitong Finance App, Jiangnan Buyi (03306) announced results for the six months ended December 31, 2023. The group achieved revenue of 2,976 billion yuan during the period, an increase of 26.08% over the previous year; profit attributable to the company's shareholders was 574 million yuan, an increase of 54.45% year on year; and profit per share was 1.14 yuan. The total dividend payout was HK$0.85, including an interim interest of HK$0.46 and a special interest of HK$0.39.

Comment: The financial report is very strong. Although Jiangnan Clothing Company is small, its performance is growing steadily, mainly due to the increase in sales compared to physical stores, the increase in online channel sales, and the increase in the size of offline stores. The company's net profit margin was refreshed to 19.3%, core members surged 40,000 to 300,000, and core members' spending reached 4.3 billion, a record high. The revenue growth rate of Xiaojiangnan and Less was over 36%, exceeding the main brand by 24%. The recovery of clothing sales in Jiangnan continues. A new growth cycle has arrived. Since July 2023, overall retail sales have increased by about 20%, and retail sales of the “Double Eleven” brands have increased by more than 30% year on year. Mainly due to the steady performance of women's clothing, children's clothing sales have increased by more than 20% year on year. As a designer brand, the company pays more attention to the sense of design than other similar brands, the style is more stable, and the differentiation from other brands is very obvious. The company has established long-term cooperation agreements with upstream fabric manufacturers and garment factories, and the supply chain has advantages. Jiangnan Puyi's dividend rate has been around 75% over the years. It is an invaluable company that takes into account high dividends due to its medium- to high-speed growth. This year marks the 30th anniversary of the establishment of Jiangnan Puyi, and the dividends have continued to grow.

[Key Announcements Nuggets]

Nine Dragons Paper (02689): A sharp increase in interim results, turning losses into profits year over year, and the overall cost advantage is obvious

According to the Zhitong Finance App, Nine Dragons Paper (02689) announced results for the six months ended December 31, 2023. The company obtained revenue of RMB 30.611 billion, a year-on-year decrease of 1.9%; the company's equity holders should have accounted for profits of RMB 292 million, compared to a loss of 1,389 million yuan in the same period last year. In the first week after the holiday, the domestic wrapping paper market had a “good start”. On February 22, the five major bases of Nine Dragons in Dongguan, Taicang, Tianjin, Shenyang, and Hubei uniformly raised the price of raw paper by 30-50 yuan/ton, involving recycled, kraft, and tile paper.

Comment: Turning losses into profits is mainly due to an increase in gross margin. Fundamentals are improving. After the holiday, the company issued a second round of price increase letters. The price increase successfully boosted the profitability of Nine Dragons Paper. The company has 9 major production bases in China, has a complete industrial chain layout, and has scale and cost advantages unmatched by many peers. The paper production capacity exceeds 20 million tons, ranking first in the world. In terms of raw material layout, the company has always been in a leading position in the country in terms of recycling channels. Furthermore, the raw material structure is optimized by constructing our own recycled fiber plants overseas, arranging wood fiber plants domestically, and constructing supporting wood pulp mills. Energy costs are one of the most important costs for paper companies. The company has its own power plant facilities, and each production base has cogeneration projects supporting production. Nine Dragons Paper has leading tonnage consumption and self-sufficiency ratio, and has achieved 100% self-power supply in paper production capacity. In comparison, other leaders in the industry have yet to achieve 100% self-power supply. Nine Dragons Paper's wood pulp self-sufficiency rate reached 40% in 2022, which is significantly higher than other peers. The company's integrated pulp and paper layout is gradually being improved, which is expected to support the improvement of the profitability of high-end products.

[List of important Hong Kong stock announcements]